Top stock ideas (Tue, Dec 5)

👋 Good Morning!

Welcome to the 109 new readers who joined yesterday!

Our AI read and summarized 86 stock ideas, 1215 news articles, and 75 insider trades and found:

  • An analyst believes $ADP has 32% upside (featured stock idea)

  • Spotify to lay off 17% of employees (news)

  • The Exec Chairman at SR Bancorp increased their holdings by 41% (insider trade)

  • A short report on Mondee predicting a -100% stock decrease (and more bonus stock ideas)

  • and much more…

Thanks for reading! Have a great day.

Connor

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FEATURED STOCK IDEA

ANALYST REPORT

Air Products and Chemicals: Reaffirming BUY following fiscal 4Q results

Air Products is a leading producer of industrial gases. It provides atmospheric and process gases and related equipment to refining and petrochemical, metals, electronics, and food and beverage companies. Air Products is also the world's leading supplier of liquefied natural gas process technology and equipment.

Ticker: APD | Price: $272.64 | Price Target: 360 (+32%) | Timeframe: N/A

🛢️ Oil/Gas | 🏗️ Equipment | 📈 Bullish Idea

Air Products & Chemicals Inc. (NYSE: APD), a leading industrial gas producer, is recommended as a BUY with a price target of $360 by analyst Bill Selesky, who highlights the company's strong fiscal 4Q23 results with adjusted earnings from continuing operations of $702 million, or $3.15 per diluted share, an increase from the previous year, driven by higher selling prices and favorable currency translation. Despite a fall in quarterly revenue and challenges in Europe, there is optimism for demand growth in Europe, stronger performance in China, and continued success in the Americas. Air Products benefits from a substantial $15 billion project backlog and maintains a robust dividend, having raised it for 41 consecutive years. Management projects an 11%-14% increase in FY24 EPS, with a target range of $12.80-$13.10, and the company's solid financial strength is noted with a stable debt profile and sufficient liquidity. Nonetheless, the stock trades at multiples exceeding historical averages on several metrics; however, these are deemed justifiable given the company's market position and project backlog. Selesky expects APD to focus on M&A and expansion over stock buybacks, reinforcing the company's growth potential.

Read the full article here. Read time: 5 min

POLL - FEATURED STOCK IDEA

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How do you rate the featured stock idea?

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Yesterday’s Rating (link):

MAUI LAND & PINEAPPLE CO ($MLP)

🟩🟩🟩⬜️⬜️ - Buy (50%)
🟥⬜️⬜️⬜️⬜️ - Pass (21%)
🟨🟨⬜️⬜️⬜️ - Watchlist (29%)

By far the highest “buy” rating for any featured stock idea so far.

  • alpo**** (watchlist) - Land, debt-free, development plans--can't ask for much more. Only possible problem is the unknown effect of climate change on Hawaii and tourism. Still not buying anything.

  • anth**** (watchlist) - Technically looks good, but the volume is terrible. I'm not sure how most people feel about locking up their equity without much upside in hope that this stock breaks out

  • emoj**** (buy) - Debt free, desirable land, water, demand for housing. Has the makings of a success story for an investment.

  • bucl**** (watchlist) - Unfortunately it is trading near it's 52 week high. As we are entering the "Santa rally" time period. I think that sometime in the spring might provide a better buying opportunity.

* There are more stock ideas later in the email!

MARKET OVERVIEW

Are you short-term bullish or bearish on the market?

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Yesterday’s Poll Vote: 50% bullish

After the most bullish day we’ve seen yesterday, the 3 large-cap indexes flipped negative today, the news bullish sentiment was almost cut in half, and Yellowbrick Road readers were 15 points less bullish than Friday! However, the Russell was still up quite a bit and the Fear v Greed index went up another point. Some readers are starting to think the rally is fizzling out.

STOCK MARKET NEWS

Today’s news is brought to you by Morning Brew. They cover the latest developments across business, tech, finance & more in its quick-to-read daily newsletter that’s perfect for busy professionals. Subscribe here

U.S. factory orders drop 3.6% in October on weak transportation orders - Market Watch 

Tech firms, Wall Street lead job cuts in Corporate America - Reuters 

Take-Two shares tumble as Rockstar Games publishes Grand Theft Auto trailer early - CNBC 

Virgin Galactic shares plunge in premarket after Branson rules out further investment - CNBC 

Spotify to lay off 17% of employees — read the full memo CEO Daniel Ek sent to staff - CNBC 

Verizon announces Netflix, Max streaming bundle for customers - Reuters 

* If you want all of the day’s most important stock market news, sign up for my free, daily email called Market Mornings.

QUIZ

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Who was the first woman to serve as the chair of the U.S. Federal Reserve?

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Yesterday’s Question (link): Which billionaire founded Oaktree Capital Management and is known for his memos to investors?

Answer: Howard Marks! Even Warren Buffett reads his memos: “When I see memos from Howard Marks in my mail, they're the first thing I open and read. I always learn something, and that goes double for his book.”

INSIDER TRADES

The insider trades are brought to you by CEO Watcher (another free, weekly email I write). It’s the only newsletter that tracks insider returns to find the best ones.

A 10% owner at Empire Petroleum Company ($EP) increased their holdings by 23% after a $10M purchase (link)

The Exec Chairman at SR Bancorp ($SRBK) increased their holdings by 41% with a $288k purchase (link)

The CFO and CEO at Seelos Therapeutics ($SEEL) both bought $100k of the stock (link, link)

The CFO at Salesforce ($CRM) sold 71% of their holdings for $24M (link)

The EVP of Operations at Nvidia ($NVDA) sold 12% of their holdings for $19M (link)

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BONUS STOCK IDEAS

BLOG POST

Hidden Value Gems: Fleetcor

Fleetcor is a global B2B payments provider focusing on expense-related payments for businesses. The company's key segments include fuel cards and transportation-related payments, corporate payments, tolls, lodging, and various smaller services.

Ticker: FLT | Price: $251.63 | Price Target: N/A | Timeframe: N/A

💸 B2B Payments | 📈 Bullish Idea

Fleetcor (FLT US), with a market cap of $16.8 billion and an enterprise value of $22.7 billion, specializes in B2B payments, focusing on fuel cards, tolls, lodging, and corporate payments. The company, led by founder and CEO Ronald Clarke since 2000, has become a significant player in the niche market of business expense management offering transaction-based fees that add value to labor-intensive corporate payments. Fleetcor has showcased a strong growth track record with 15% annual revenue growth over the past ten years and impressive operating and net income margins of 43% and 29%, respectively. It has expanded via numerous acquisitions and has been successful in share buybacks, repurchasing 25% of its shares for $5.7 billion with current international revenue accounting for 40% of its total revenue. Despite notable EPS growth, the stock price has been underperforming, attracting hedge fund interest from DE Shaw, resulting in board changes and plans to simplify company structure. Amidst a slower growth forecast due to macroeconomic pressures, Fleetcor trades at a forward P/E of 12.5x, lower than its historical average, offering a potentially undervalued entry point, particularly in comparison to peers like American Express. However, Fleetcor's leverage with a Net Debt/EBITDA ratio of 2.66x, competitiveness in niche markets, cyclical nature, and moderate retention rates pose as risks to investors.

Read the full article here. Read time: 4 min

BLOG POST

[SHORT] Mondee: Bad Trip Choking on High Interest Debt, 100% Downside

Mondee Holdings, Inc. operates as a travel technology company in the leisure and corporate travel markets in the United States and internationally

Ticker: MOND | Price: $3.12 | Price Target: $0 (-100%) | Timeframe: N/A

🛩️ Travel Technology | 📉 Bearish Idea

Mondee, a high-interest debt-ridden airfare consolidator, faces a 100% downside risk, largely due to its unsustainable debt structure and poor management decisions. The company is under pressure to refinance $155 million in loans at a 22% interest rate within four months to avoid default, with the potential for even more onerous terms ahead. Its operations, barely profitable with 9% adjusted EBITDA, are overshadowed by growing obligations, with net debt to 2023 adjusted EBITDA at 10x and interest plus dividends almost quadrupling organic revenue. Despite announcing a questionable $40 million buyback plan with insufficient unrestricted cash and negative free cash flow, Mondee is further compromised by insiders selling shares just before a revenue-cutting subsidiary sale. Comparatively, Mondee's valuation at 24x EV/’23E adj. EBITDA dwarfs the OTA sector average of 10x, unjustifiably positioning it above more stable peers like Despegar. Given these red flags, including a significant insider stock sale prior to a revenue guidance cut, a problematic tech platform, and security lapses, the prognosis is bleak, with a potential complete wipeout of common equity value looming.

Read the full article here. Read time: 6 min

HEDGE FUND

SouthernSun Small Cap: Boston Beer Company

Boston Beer Company, Inc. (SAM) is a leading American brewing company that produces a variety of alcoholic beverages including beer, hard seltzer, and flavored teas. The company is known for its Truly brand in the hard seltzer category and its Twisted Tea brand. Boston Beer Company has a strong focus on innovation, operational efficiency, and prudent balance sheet management.

Ticker: SAM | Price: $356.08 | Price Target: N/A | Timeframe: N/A

🍾 Alcoholic Beverages | 📈 Bullish Idea

Boston Beer Company, Inc. (SAM) reported results that were better than market expectations and was the top contributor in the Small Cap strategy in the third quarter. The company continues to fight headwinds in the hard seltzer category with its Truly brand. However, the Twisted Tea brand is now significantly larger than Truly and continues to produce excellent results. Management is steering a multi-year effort to enhance the efficiency of its manufacturing processes that we believe is likely to produce margin improvement. The company continues to launch new innovations; we believe these innovations will produce results in the long term, though the timing of the benefits is difficult to predict. Management continues to govern the balance sheet prudently, with no debt, and they recently began repurchasing shares with excess cash flow for the first time in several years. We remain confident their efforts to grow the brands, improve the efficiency of operations, and allocate the company’s capital effectively will reward investors over time.

Read the full article here. Read time: 2 min

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Which bonus stock idea was the most compelling to you?

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Yesterday’s Poll Results (link):

🟩🟩🟩⬜️⬜️ Currency Exchange International ($CURN) [39%]

🟨🟨⬜️⬜️⬜️ XPEL ($XPEL) [32%]

🟥⬜️⬜️⬜️⬜️ CSW Industrials ($CSWI) [29%]

WEEKLY TOURNAMENT

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🏆 This Week’s Leaderboard

  1. emoj**** (49 points)

  2. dana.*** (49 points)

  3. joe_**** (49 points)

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